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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (5165)	11/22/2006 11:52:26 AM
From: Wharf Rat	Respond to of 24233

Energy output short of demand By Andrea R. Mihailescu UNITED PRESS INTERNATIONAL November 20, 2006 Mexico, the No. 2 U.S. supplier of oil, is unable to produce enough to meet the demands of its customers, especially its neighbor to the north, because of outdated national economic policies that have hamstrung its oil and gas exploration and production, analysts say. Mexican President-elect Felipe Calderon met with Canadian officials this month to discuss trade and explore further cooperation as Mexico's production capacity dives. Although Mexico has the potential to be an energy powerhouse, the country's national oil company, Pemex, lacks the investment funds to improve production in mature fields. As oil prices rose and production increased in the past year, the government became addicted to Pemex's revenues, taking more than 60 percent of the company's earnings, which provide a third of the national budget, the Canadian newsmagazine Maclean's reported. Mexico "should be an energy megastar and is performing way off Broadway in terms of production vitality, because Pemex is required to turn over the bulk of its revenues to the government. This prevents exploration, infrastructure investment, and creates debt," said Vincent DeVito, an international energy attorney with Pepper Hamilton LLP in New York and a former acting assistant secretary of energy. Canada and Mexico are the top two suppliers of oil to the United States, with exports of 2.1 million and 1.8 million barrels per day respectively, but the two countries are worlds apart in the development of their energy resources. "Oil and gas will continue to be a significant part of [the U.S.] energy supply and Pemex must devise a way to allow private investment into the Mexico market in order to remain a secure supplier," Mr. DeVito said. "If not, there will be a crisis in Mexico; and, a crisis in Mexico is a crisis in the United States and, conceivably, a crisis in Canada." Pemex has accrued debt and recently posted a net loss of $7 billion for 2005, despite record-high oil prices. Production is expected to face a steep decline and, as things stand, Mexico has only 10 years of reserves left. All hydrocarbon resources are nationalized under the country's constitution. In 1938, the industry was nationalized with the establishment of Pemex as the state oil company. Although Canada plans to boost production, it cannot make up for the shortfall caused by Mexico's export decline. The shortfall will force the United States to seek alternative suppliers, which will likely increase prices, according to analysts. washingtontimes.com